The affirmation of SLG's and Reckson's ratings reflect the company's
credit strengths, including its staggered lease maturity and manageable
debt expiration schedules, good contingent liquidity in the form of
unencumbered assets and the company's maintenance of leverage and fixed
charge coverage appropriate for the rating category. These positive
rating elements are balanced by broader concerns regarding the midtown
Manhattan office leasing environment, which remains somewhat dependent
on the growth of large financial institutions and supporting industries
such as law and accounting firms.

APPROPRIATE LEVERAGE

SLG's leverage ratio is strong for the 'BB+' rating at 7.8x as of Dec.
31, 2012, down from 8.3x and 8.4x as of Dec. 31, 2011 and 2010,
respectively. Leverage has improved primarily due to growth in operating
property portfolio cash flows and interest income from SLG's structured
finance investments. Fitch expects leverage to sustain in the high
7.0x's level over the next few years. Fitch defines leverage as net debt
divided by recurring operating EBITDA, including Fitch's estimate of
recurring cash flow distributions from unconsolidated joint ventures.

APPROPRIATE FIXED-CHARGE COVERAGE

The company's fixed-charge coverage ratio was 1.7x for the year ended
Dec. 31, 2012, as compared to 1.6x in 2011 and 1.8x in 2010. Coverage
has remained in-line for the rating primarily due to free rent periods
offered to tenants, combined with recurring capital expenditure costs
related to new leases. Fitch expects coverage to improve slightly as the
Manhattan leasing environment remains relatively subdued and landlords
continue to offer attractive tenant improvement packages. Fitch expects
this operating softness will be offset by lower debt and preferred stock
funding costs. Fixed-charge coverage is defined as recurring operating
EBITDA including Fitch's estimate of recurring cash flow distributions
from unconsolidated joint ventures less recurring capital expenditures
and straight-line rents, divided by interest incurred and preferred
stock distributions.

STRONG AND DIVERSIFIED TENANT BASE

The company's portfolio benefits from tenant diversification with the
top 10 tenants representing only 30% of annual base rent. The largest
tenant, Citigroup, N.A. ('A' IDR with a Stable Outlook by Fitch),
comprises 6.4% of SLG's share of annual cash rent. All of SLG's top 30
tenants that are rated by Fitch have investment grade ratings.

MANAGEABLE LEASE EXPIRATION PROFILE

The company has a manageable lease expiration schedule with only 37% of
consolidated Manhattan rents expiring over the next five years. While
approximately 56% of the company's consolidated suburban property rents
expire over the next five years, the suburban portfolio represents a
fairly limited portion of the company's total assets and only 9% of 2012
cash rent.

MANAGEABLE DEBT MATURITIES

Further supporting the ratings is the company's manageable debt maturity
schedule. Over the next five years, 2017 is the largest year of debt
maturities with 28% of pro rata debt expiring, with no other year
greater than 16%. In addition, the company's ratios under its unsecured
credit facilities' financial covenants do not hinder the company's
financial flexibility at this point in time.

SOLID UNENCUMBERED ASSET COVERAGE OF DEBT

The affirmations are further supported by SLG's unencumbered property
pool coverage of unsecured debt, which gives the company financial
flexibility as a source of contingent liquidity. Consolidated
unencumbered asset coverage of net unsecured debt (calculated as
annualized 4Q 2012 unencumbered property net operating income divided by
a stressed 7% capitalization rate) results in coverage of 1.9x. This
ratio is strong for the rating, particularly given that Midtown
Manhattan assets are highly sought after by secured lenders and foreign
investors, resulting in stronger contingent liquidity relative to many
asset classes.

STRONG MANAGEMENT TEAM

The ratings also point to the strength of SLG's management team given
their knowledge of the Manhattan office sector. This expertise has been
demonstrated by the company's ability to identify off-market acquisition
opportunities, and its maintenance of portfolio occupancy and balance
sheet liquidity throughout the downturn.

If secured debt were refinanced at 80% of the maturing balance,
liquidity coverage would improve to 3.4x. The company's liquidity is
also strengthened by its conservative common dividend policy, which
enables it to retain substantial operating cash flow. The company's AFFO
payout ratio is low at approximately 34% and provides the company with
additional financial flexibility.

MIDTOWN LEASING CONCERNS

Offsetting these strengths are Fitch's concerns regarding the uncertain
Midtown Manhattan leasing environment. While the New York City leasing
environment has strengthened over the last few years and SLG experienced
robust leasing volumes in 2012, the company continues to incur
significant costs in the form of tenant improvements, leasing
commissions and free rent incentives as tenant inducements, which has
placed pressure on the company's fixed charge coverage. In addition, a
downturn in space demands from the financial services industry, which
accounts for 36% of SLG's share of base rental revenue, may result in
reduced cash flows or values of SLG's properties.

RECKSON'S IDR LINKED TO SLG'S

Consistent with Fitch's criteria, 'Parent and Subsidiary Rating Linkage'
dated Aug. 8, 2012 and available on 'www.fitchratings.com',
Reckson's IDR is linked and synchronized with SLG's due to strong legal
and operational ties between SLG and Reckson, including each entity
guaranteeing certain corporate debt of the other. These equal IDRs are
based on the consolidated credit profile.

PREFERRED STOCK NOTCHING

The two-notch differential between SLG's IDR and preferred stock rating
is consistent with Fitch's criteria for corporate entities with an IDR
of 'BB+'. Based on Fitch Research on 'Treatment and Notching of Hybrids
in Nonfinancial Corporate and REIT Credit Analysis', available on
Fitch's web site at www.fitchratings.com,
these preferred securities are deeply subordinated and have loss
absorption elements that would likely result in poor recoveries in the
event of a corporate default.

JUNIOR SUBORDINATED NOTES NOTCHING

The one-notch differential between SLG's IDR and junior subordinated
notes (trust preferred securities) is consistent with Fitch's criteria
for corporate entities with an IDR of 'BB+'. These securities are senior
to SLG's perpetual preferred stock but subordinate to SLG's corporate
debt. Holders of such notes have the ability to demand full repayment of
principal and interest in the event of unpaid interest.

RATING SENSITIVITIES

The following factors may have a positive impact on SLG's Ratings and/or
Outlook:

--Fitch's expectation of leverage sustaining below 8.0x for several
quarters. This factor was previously 7.5x and was changed to 8.0x to
reflect the consistently lower capitalization rates for midtown
Manhattan office buildings relative to other asset classes (leverage was
7.8x as of Dec. 31, 2012);

Additional information is available at 'www.fitchratings.com'.
The ratings above were solicited by, or on behalf of, the issuer, and
therefore, Fitch has been compensated for the provision of the ratings.

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DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
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